LONDON, Nov 22 (Reuters) - Gold prices edged up on Thursday
as well-received Chinese manufacturing data and hopes that a
bailout deal for Greece may eventually be agreed boosted stocks
and lifted the euro to three-week highs versus the dollar.

Prices held in a tight range, however, with trading activity
expected to be light because of the U.S. Thanksgiving holiday,
which has closed Wall Street.

Spot gold was up 0.15 percent at $1,731.04 an ounce
at 1411 GMT, while U.S. gold was up 0.18 percent at
$1,731.30.

The single currency broke higher and world stocks extended a
week-long rally as manufacturing surveys in China and the United
States boosted confidence over the growth outlook, while euro
zone data was not as weak as some had feared.

A report showed China's manufacturing Purchasing Managers
Index rose to a 13-month high of 50.4 in November, while euro
zone data showed manufacturing activity slowed less than
expected in November.

"Gold is 'risk on' - equities are higher and the dollar is a
tad weaker. (But) the market needs a driver to break it above
$1,740," Saxo Bank vice president Ole Hansen said.

He said the better than expected data from China could augur
well for demand from the country, which has vied with India as
the world's biggest gold consumer this year, but whose gold
buying has proved fragile in the face of slowing growth.

"If there is a belief that China has turned the corner,
there could be more physical demand," he said.

Gold prices have held a much closer correlation this year
than last to assets seen as higher risk, like equities, the
single currency and other commodities, as the dollar has taken
over as investors' haven of choice.

Gold's 11 percent rise this year has come largely on the
back of U.S. monetary easing measures to boost its economy. It
has been hovering around $1,730 this week as investors focus on
whether the United States will avoid a fiscal crisis.

"The gold market is likely to trade sideways unless you get
clear news from the U.S. on the fiscal cliff," Nic Brown,
analyst with Natixis, said, referring to $600 billion in tax
hike and spending cuts that are due to roll in early next year.

"If there is a good resolution on the fiscal cliff,
potentially the gold price could go down," he added. "The real
movement would be money going back to other risky assets. Our
central scenario is for a resolution of the fiscal cliff issue."

Brown said: "What would support gold would be the U.S.
drifting in to a fiscal crisis similar to Europe."

Federal Reserve chairman Ben Bernanke on Wednesday repeated
a warning that failing to avert a move towards the cliff could
lead to recession, and said worries over how budget negotiations
will be resolved were already damaging growth.

GOLD DEMAND

Investors said resilient Indian and Chinese gold demand
underpinned prices.

Ross Norman, chief executive of precious metals trader
Sharps Pixley, said Indian physical demand for gold had been
better than expected this year, despite an increased gold import
duty and a weak monsoon. A poor monsoon can erode farmers'
earnings and gold purchases in the world's top consumer.

"There are some fresh longs coming into the market on the
basis of physical demand in gold," he said.

Silver rose to $33.44 an ounce, its highest in more
than a month, before easing back to $33.38, up 0.15 percent.
Silver has risen more than 20 percent this year, leading
precious metals.

Silver's ratio to gold, which measures the number of silver
ounces needed to buy an ounce of gold, held near the six-week
low it hit on Wednesday at 51.86 after silver outperformed.

"The ratio should head towards the less steep rising channel
support at 50.90/60, or even all the way back to the low of last
February at 48.50," Societe Generale said in a note.

Silver usually tracks moves in gold, but can also be
influenced by riskier assets due to its industrial nature.